Due Diligence

Here is a short form due diligence checklist we prepared for smaller purchase and sale of business transactions, to help clients determine what due diligence they should request from the other party.

1. Financials for 3 years – audited historically prepared?
2. Recent sales figures.
3. Tax Returns for 3 years.
4. Certificate of Incorporation and any Amendments to the Certificate.  (This is publicly available.)
5. By-laws.
6. List of subsidiaries and affiliates and corporate info regarding same.
7. A list of shareholders and shareholdings (preferred and common).
8. Stock Ledger/history of stock transfers.
9. Any shareholder agreements or voting agreements.
10. A list of option holders/history of option exercise.
11. A list of directors.
12. Director (or committee) Minutes or unanimous written consents.
13. Shareholder Minutes or unanimous written consents.
14. Licenses and permits.
15. Intellectual Property – patents (domestic and international), trademarks, copyrights, etc.  What about pending applications?
16. List of other material assets; any liens against same?
17. Stock Option Plan.
18. Pension, Profit Sharing, Sec 401k plans (Form 5500s).
19. Health, disability, etc. plans.
20. States where the company is qualified to do business.
21. Employment Agreements and/or Employee Confidentiality Agreements and/or Invention Agreements.
22. Employment handbooks.
23. Severance Agreements.
24. Material Contracts. Which are not terminable at will?
25. Real Estate leases (term runs until?); ownership.
26. Copies of bank credit line and loan agreements.
27. Details of claims, lawsuits and administrative proceedings to which the company is a party.